INTENTION TO CREATE LEGAL RELATION
•Domestic and Social Agreements
•“Rebuttable Presumption” that there is no intention to create legal relations
•Balfour v Balfour [1919] 2 KB 571
–Deft/husband went to work abroad
–He agreed to pay clmt/wife £30 per month
–Clmt/wife agreed not to ask deft for further maintenance
–Clmt/wife sought to enforce the agreement
–Held (CA): though apparently supported by consideration, the agreement was not an enforceable contract
–that most such agreements between husband and wife are not intended to have legal consequences
–that such agreements are usually based on considerations of natural love and affection
–that the courts would be flooded if such arrangements were held to result in legal obligations
•Domestic and Social Agreements
•“Rebuttable Presumption” that there is no intention to create legal relations
•Jones v Padavatton [1969] 1 WLR 328
–In 1962, daughter accepted mother’s suggestion to move from Washington DC, where she was a secretary, to read for the Bar in England
–Mother agreed to pay daughter’s maintenance; later mother agreed to buy a house in which the daughter would live
–It was also agreed that the rent from the other rooms would pay the daughter’s maintenance
–In 1967, the daughter had not yet passed; the parties fell out; mother claimed possession of the house; daughter relied on the agreement
–Held (CA – Danckwerts & Fenton Atkinson LJJ): that the mother was entitled to possession as the agreement was a family agreement not intended to be legally binding; and
–that the arrangement was too vague and uncertain to be enforceable as a contract
–Salmon LJ: that the mother was entitled to possession; that the agreement was intended to have contractual force; but
–that a term was to be implied that the contract would only last for a reasonable time to enable the daughter to complete her studies
–that reasonable time was 5 years and had thus elapsed by the time of the action
•Domestic and Social Agreements
•“Rebuttable Presumption” that there is no intention to create legal relations
•Rebutting the “presumption”
•Evidence that agreement was intended to have legal consequences
•Merritt v Merritt [1970] 1 WLR 1211
–Husband who left his wife agreed to pay her £40 per month
–She was to make outstanding mortgage payments from that allowance
–Husband also signed a note that he would transfer the house to her when mortgage payments were completed
–Husband later refused to transfer the house
–Held (CA): the agreement was intended to create legal relations
–“… domestic arrangements are ordinarily not intended to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable undertakings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.” Per Lord Denning MR
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•Edwards v Skyways Ltd [1964] 1 WLR 349
–S promised to make an “ex gratia” payment to some employees made redundant
–S later went back on the promise to E who left the company
–S argued that though its promise was supported by consideration, it was not legally enforceable because it was “ex gratia”
–Held (Megaw J): there was nothing in the words “ex gratia” … to warrant the conclusion that the promise, duly made and accepted for valid consideration, was not intended by the parties to be enforceable in law.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•J Evans etc v Andrea Merzario Ltd [1976] 1 WLR 1078
–Machinery regularly shipped by defts for clmts had always been agreed to be carried below deck
– Deft’s rep suggested the use of containers but assured that the containers would also be carried below deck
–One container was subsequently carried on deck and fell overboard
–Defts argued that the agreement to carry containers below deck was not intended to create legal relations
–Held: the background to the promise suggests that such intention should be inferred especially as the parties had always previously agreed to carriage below deck and the clmts would not have lightly agreed to change.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•Esso Pet. Ltd v Commnrs of Customs & Excise [1976] 1 WLR 1
–Esso ran a promotion in which garages were supplied with ‘coins’ showing the England 1970 World Cup squad
–Garages were to give away one coin with every 4 gallons of petrol sold
–C & E sought to subject the coins to purchase tax claiming they had been sold
–Held (HL, Lord Fraser dissenting): that the coins were not being sold (no money consideration)
–Obiter per Lords Wilberforce, Simon & Fraser: that there was intention to create legal relations (in respect of the coins)
–that the coins were supplied as a matter of contractual obligation as the whole transaction took place in a business setting and it was undesirable to allow companies to make promises in adverts which they were not bound to keep
–Obiter per Viscount Dilhorne & Lord Russell (dissenting): that there was no intention to create legal relations in respect of the coins
–that the coins were a gift in that they had little intrinsic value
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Honour Clauses” – i.e. agreements ‘binding in honour only’
•Rose & Frank C0 v J R Crompton Bros [1925] AC 445
–Clmt was appointed by agreement as sole US agents of defts
–Agreement had a clause that the arrangement shall not be subject to legal jurisdiction but that they honourably pledged themselves in the fullest confidence to carry it through
–Defts terminated the agency and refused to execute orders received before the termination; clmts sued for breach of contract and non-delivery
–Held (CA): that there was no binding contract on which a legal action could be based
–(Majority, Atkin LJ Dissenting): that the orders and acceptances of those orders were not legally binding contracts to deliver
–Held (HL): that there was no legally binding contract in view of the honour clause; but
–that the orders had been accepted and therefore delivery was legally required.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Honour Clauses” – i.e. agreements ‘binding in honour only’
•Jones v Vernon Pools Ltd [1938] 2 All ER 626
–Clmt claimed that he sent pools coupons to defts
–Defts denied receiving it
–Coupon stated that ‘the sending in of the coupon or any transaction entered into in respect of the pool should not be attended by or give rise to any legal relationship … or be legally enforceable or the subject of litigation … but … should be binding in honour only.’
–Held (Atkin J): that condition prevented the bringing of any action in relation to the pools coupon.
•“Rebuttable Presumption” that there is no intention to create legal relations
•Balfour v Balfour [1919] 2 KB 571
–Deft/husband went to work abroad
–He agreed to pay clmt/wife £30 per month
–Clmt/wife agreed not to ask deft for further maintenance
–Clmt/wife sought to enforce the agreement
–Held (CA): though apparently supported by consideration, the agreement was not an enforceable contract
–that most such agreements between husband and wife are not intended to have legal consequences
–that such agreements are usually based on considerations of natural love and affection
–that the courts would be flooded if such arrangements were held to result in legal obligations
•Domestic and Social Agreements
•“Rebuttable Presumption” that there is no intention to create legal relations
•Jones v Padavatton [1969] 1 WLR 328
–In 1962, daughter accepted mother’s suggestion to move from Washington DC, where she was a secretary, to read for the Bar in England
–Mother agreed to pay daughter’s maintenance; later mother agreed to buy a house in which the daughter would live
–It was also agreed that the rent from the other rooms would pay the daughter’s maintenance
–In 1967, the daughter had not yet passed; the parties fell out; mother claimed possession of the house; daughter relied on the agreement
–Held (CA – Danckwerts & Fenton Atkinson LJJ): that the mother was entitled to possession as the agreement was a family agreement not intended to be legally binding; and
–that the arrangement was too vague and uncertain to be enforceable as a contract
–Salmon LJ: that the mother was entitled to possession; that the agreement was intended to have contractual force; but
–that a term was to be implied that the contract would only last for a reasonable time to enable the daughter to complete her studies
–that reasonable time was 5 years and had thus elapsed by the time of the action
•Domestic and Social Agreements
•“Rebuttable Presumption” that there is no intention to create legal relations
•Rebutting the “presumption”
•Evidence that agreement was intended to have legal consequences
•Merritt v Merritt [1970] 1 WLR 1211
–Husband who left his wife agreed to pay her £40 per month
–She was to make outstanding mortgage payments from that allowance
–Husband also signed a note that he would transfer the house to her when mortgage payments were completed
–Husband later refused to transfer the house
–Held (CA): the agreement was intended to create legal relations
–“… domestic arrangements are ordinarily not intended to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable undertakings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.” Per Lord Denning MR
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•Edwards v Skyways Ltd [1964] 1 WLR 349
–S promised to make an “ex gratia” payment to some employees made redundant
–S later went back on the promise to E who left the company
–S argued that though its promise was supported by consideration, it was not legally enforceable because it was “ex gratia”
–Held (Megaw J): there was nothing in the words “ex gratia” … to warrant the conclusion that the promise, duly made and accepted for valid consideration, was not intended by the parties to be enforceable in law.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•J Evans etc v Andrea Merzario Ltd [1976] 1 WLR 1078
–Machinery regularly shipped by defts for clmts had always been agreed to be carried below deck
– Deft’s rep suggested the use of containers but assured that the containers would also be carried below deck
–One container was subsequently carried on deck and fell overboard
–Defts argued that the agreement to carry containers below deck was not intended to create legal relations
–Held: the background to the promise suggests that such intention should be inferred especially as the parties had always previously agreed to carriage below deck and the clmts would not have lightly agreed to change.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Heavy” presumption; not easy to rebut; “clear” evidence to the contrary required
•Esso Pet. Ltd v Commnrs of Customs & Excise [1976] 1 WLR 1
–Esso ran a promotion in which garages were supplied with ‘coins’ showing the England 1970 World Cup squad
–Garages were to give away one coin with every 4 gallons of petrol sold
–C & E sought to subject the coins to purchase tax claiming they had been sold
–Held (HL, Lord Fraser dissenting): that the coins were not being sold (no money consideration)
–Obiter per Lords Wilberforce, Simon & Fraser: that there was intention to create legal relations (in respect of the coins)
–that the coins were supplied as a matter of contractual obligation as the whole transaction took place in a business setting and it was undesirable to allow companies to make promises in adverts which they were not bound to keep
–Obiter per Viscount Dilhorne & Lord Russell (dissenting): that there was no intention to create legal relations in respect of the coins
–that the coins were a gift in that they had little intrinsic value
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Honour Clauses” – i.e. agreements ‘binding in honour only’
•Rose & Frank C0 v J R Crompton Bros [1925] AC 445
–Clmt was appointed by agreement as sole US agents of defts
–Agreement had a clause that the arrangement shall not be subject to legal jurisdiction but that they honourably pledged themselves in the fullest confidence to carry it through
–Defts terminated the agency and refused to execute orders received before the termination; clmts sued for breach of contract and non-delivery
–Held (CA): that there was no binding contract on which a legal action could be based
–(Majority, Atkin LJ Dissenting): that the orders and acceptances of those orders were not legally binding contracts to deliver
–Held (HL): that there was no legally binding contract in view of the honour clause; but
–that the orders had been accepted and therefore delivery was legally required.
•Commercial Agreements
•“Rebuttable Presumption” that they are intended to create legal relations
•“Honour Clauses” – i.e. agreements ‘binding in honour only’
•Jones v Vernon Pools Ltd [1938] 2 All ER 626
–Clmt claimed that he sent pools coupons to defts
–Defts denied receiving it
–Coupon stated that ‘the sending in of the coupon or any transaction entered into in respect of the pool should not be attended by or give rise to any legal relationship … or be legally enforceable or the subject of litigation … but … should be binding in honour only.’
–Held (Atkin J): that condition prevented the bringing of any action in relation to the pools coupon.
Comments